Multinational companies in India have reached out to their tax advisers seeking to know the exact tax payable on dividends under existing tax treaties and if the status of most favoured nation would lead to additional benefits.

Several persons in the know said multinationals are analysing the total tax on the dividends with respect to the tax treaties and the most favoured nation status of the source country. Many would now fall back on the tax treaties and could be looking to postpone their dividend payouts till April this year.

Under most tax treaties India has with other countries, multinationals will be liable to pay 5% to 15% tax on dividends against 20% earlier. However, multinationals from countries such as Switzerland and France will even get to set off additional 5% tax against liabilities in their home country.

“Following the recent changes in the budget around dividends, most multinationals would look to give dividends after March end as that would mean tax of anywhere between 5-15% depending on the tax treaty. For countries like France and Switzerland that have MFN status, the rate would be 5% tax. Further, in either case set-off would be available, said Girish Vanvari, founder of tax advisory firm, Transaction Square.